Total Compensation Is The Monetary And Nonmonetary Rewards

Total compensation is the monetary and nonmonetary rewards offered to employees. Therefore, this can help the organization be effective or prevent it from being effective. Consequently, the purpose of this paper is to briefly analyze the positive and negative effects of total compensation. Total compensation influences productivity in numerous ways. For instance, â€Å"compensation practices that link pay to the company’s financial performance or other indicators of productivity can help focus employees’ attention on finding new ways to reduce costs and increase revenues†(Jackson, S. E., Schuler, R. S., Werner, S. 2012). Two preferred ways employees contain cost is by changing the pay mix and by emphasizing nonmonetary compensation.†¦show more content†¦As a result, this increases the talent pool and can make them an employer of choice among their competition. A total compensation system could prevent an organization from being effective in several ways; for instance, if their total compensation package is not aligning with the employee needs, â€Å"total compensation influences employee attraction, motivation, and retention. However, the importance of the various components depend on the person and his or her situation†(Jackson, S. E., Schuler, R. S., Werner, S. 2012). The compensation system within an organization should align to the overall Business plan to achieve expected results. In other words, the total compensation includes: base pay, performance based pay, benefits and services, and nonmonetary rewards. All of this together should reach a balance; otherwise, the expected results would be devastating. During recession, many Americans suffered, and the economy pressured many organizations to cut workers. However, experts on the matter explain, â€Å"In light of the massive number of layoffs, pay cuts look like the more hum ane cost-cutting tactic because they save jobs. UCLA management professor David Lewin says a small reduction in pay, when handled carefully, can even foster a collegial spirit during hard times. â€Å"It sends a signal that no one is expendable, but everyone is valued. We all suffer the painShow MoreRelatedHuman Resources Development And Management Essay1680 Words   |  7 Pagesmisery to simply have a hefty paycheck, or if receiving a modest salary with numerous nonmonetary benefits is more valuable. In order to achieve a healthy work-life balance, it depends on one’s values, family life, and spending habits (Korkki, 2010). 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